The problem is not their business model; it is the fact that without patents the generic drug makers would enter the market for a specific drug as soon as the original did. Therefore the company that invested their money into the R&D and other costs associated with drug X would then have to face the same market price as the generic companies (a significantly lower price than they would otherwise face). This would make it unlikely that they would be able to recover their costs and make a profit equal to alternative investment strategies. Without patents there would be a very strong incentive to simply wait for other companies to pay for the R&D and then copy their drug and make your own generic version. And since most companies would adopt this strategy, innovation would decrease significantly in the pharmacuetical industry.

No rational person would invest such a huge amount of time and money into pharma if there wasnt a protection in place that made it possible for them to make a profit off of their findings.

Again, boo hoo. This is an explicitly protectionist argument, and like all protectionist arguments, the answer is: if they can’t earn a profit on their product through honest labor, without the benefit of protectionist trade barriers, then they need to think harder about their business model. Big pharma’s failed business model is their problem, not mine.

Why don’t you take out a huge loan (say $500,000,000), invest it in the R&D and production of a new drug, and then send me a copy of your findings. That way I will be able to produce the drugs and sell them to the public myself without having to invest all that money.

No rational person would invest such a huge amount of time and money into pharma if there wasnt a protection in place that made it possible for them to make a profit off of their findings.

There is a time limit on the patent in order to have the best of both worlds. The patent allows for an incentive for innovation because of the ability to make a profit from your investment, and the time limit allows for the eventual decrease in prices through the competitive market that emerges after the patent expires.

Without the patent protection there would be far less innovation in pharmaceuticals, and without the time limit on the patent, prices would remain unnecessarily high. Both aspects are necessary, so we put up with high prices for awhile to encourage the future production of new drugs.

Read this paper: http://levine.sscnet.ucla.edu/archive/grabow-patents_innov.pdf

It takes a $500 million and 12 to 15 years to discover and bring a significant drug to market today. Who is going to invest that kind of money without patent protection?

Boo hoo. Without tariff protection, who is going to invest in American automobiles?

Shannon Love:

If a decision-making about a resource cannot be effectively allocated to private entities via a property mechanism then state will allocate the resource via politics.

Property rights are not “allocated to private entities” by the State. They are earned by honest labor. The real choice is not between State-granted tenure to private monopolies (fascism) or total State property (state socialism); it’s between individual rights and State piracy of any kind.

How you apply this to the issue of government-enforced patent restrictions I’ll leave up to you.

Beck:

So are patent laws moral? I would argue that in general they are for the same reason that copyright laws are moral. If Person X devotes Y time and Z money towards developing a product or service, then that person deserves to benefit from the use by others of the product.

You’re right that the morality of patent restrictions is the real issue here, not the consequentialist pay-off. I’m baffled by your moral case for patents, however. People deserve lots of things; for example, I think that William Lloyd Garrison deserved a million dollars rather than a life lived constantly on the edge of penury for his long and difficult labors against the evil of slavery. But it doesn’t follow from the fact that somebody deserves a certain reward that they have the right to extract it by force. Which is of course what copyright and patents do: create monopoly profits by forcibly suppressing competitors.

You might claim: “Well, look, if I put my time and work and hard-earned money into making an automobile, that’s my property, and I have the exclusive right to sell it. Stopping competitors from selling the car I made isn’t extracting a monopoly profit by force, in any interesting sense; it’s just suppressing brigandry. It’s the same way with ideas for new drugs or with the book that I just wrote.” But there’s an obvious difference between the two cases: in order for me to take the car you made and sell it, I have to deprive you of your ability to sell or use it. That’s why it’s robbery: I deprived you of the property that you own. In order for me to “sell” an “idea,” I don’t need to deprive you of your ability to sell it. I can independently discover it by investing my own time, money, and labor without interacting with you at all; or I can discover it by investing my own time, money, and labor in taking apart and understanding your invention after I buy it; or you can tell me your idea and I can turn around and use the idea you’ve given me. But in all of these cases I’m selling things while leaving you in full possession of your idea. So what have I robbed you of? Nothing. You still have exactly what you had before.

You might point out that, while I’m not depriving you of the chance to sell the expressions of your idea, I am depriving you of the chance to sell the expressions of your idea at the rate you think you deserve. No I’m not: you can sell it at any rate that you want to, and customers will make their own decisions as to whether or not to buy it. You might point out that by underselling you on expressions of your idea, I’m depriving you of customers who might otherwise buy it at the higher price. Well, so what? You don’t have an ownership claim over customers. Sorry.

There are at least two important problems with making a case for patents, or intellectual property rights altogether, on pure moral grounds.
First of all, the necessity of property rights is based on the tendency of resources to be scarce. If resources were not scarce, we would not need to restrict the use of them with property rights.
Secondly, anyone defending intellectual property rights on a moral basis need to explain the justification of a time limit on this particular “property right”. If you create something, and hence you are the righteous owner, why should your ownership expire after 20 years? Some extreme objectivists argue that there should not be a time limit. Well, I for one am glad that was not the case back when some genius first came up with the idea of creating a wheel. Imagine if car manufacturers and bicycle companies, and thus consumers, would be forced to pay huge licence fees to the distant relatives of the man who, supposedly, invented the WHEEL®…

Except that they do such research. For example, Merck is currently in the news because of its breakthroughs in a cervical cancer vaccine .

Here’s the thing to bear in mind though, people want to live, people don’t want to suffer. People will find *some way* to invest their money in developing pharmaceuticals. Pound to a penny that they would find a way that was more efficient than the big-house-and-fancy-car-for-the-execs model encouraged by the government enforced monopoly model of patents.

Rich

Much to the distaste of Iron Lung makers and physical therapists, Polio was defeated when the cause and solution were understood discovered.

For hundreds of years it was believed that peptic ulcers where caused by certain foods or stress. I had friends that where hospitalized as recently as 15 years ago. It is now known that it is a bacterial infection simply treated with antibiotics.

The well known viruses are the “cold and flu” which make us immediatly sick, begging our bodys to heal itself. What about viruses that don’t make us immediated aware of their danger. They infect us in subtle ways. They modify cells in a minor way producing a little more or a little less of a desired chemical output that effects neighboring cell behavior.

Big Pharma hates disease research because it can offer a cure and there is no money in a cure.

Most money today is spent on feel good drug research and a very little on identifying the bad actors and methods to eliminate them.